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Fashion Retailers Cancel Nearly $1.5 Billion in Orders from Bangladesh

Bangladesh’s ready-made garment sector is teetering on the brink of disaster.

In the past week, factories have been facing a crush of daily order cancellations from brands and retailers that manufacture in Bangladesh, and as of Sunday, 490 factories have fielded cancellations affecting $1.44 billion worth of exports.

“Factories are reporting and registering new cases every hour,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Rubana Huq told Sourcing Journal late Sunday. The backpedaling on already placed orders could impact as many as 1.2 million workers.

Calling on local buying offices in a meeting last week, BGMEA, which represents the country’s clothing factories, advised that no confirmed orders should be cancelled, and that orders retailers hope to postpone should be paid in part ahead of time rather than at point of shipping to help finance workers’ wages in the interim.

“We met with them and have appealed to them to take our goods, which are already produced, even with deferred payment terms,” Hoq said. “We have also appealed to them to kindly also continue with taking orders till July and then adjust inventory later as we need to pay our workers.

“While the brands close stores and recalibrate their exposure, we have a difficult reality to handle at our end,” Huq said, adding that 4.1 million workers “can’t go hungry.”

When orders aren’t cancelled, brands are still pulling back on fabric placements, and now factories are incurring all of the raw material liability.

“Unless the brands help us by lifting our ready goods and assuming liability of the cut and uncut fabric, our financial status will be jeopardized,” Huq said. “We have appealed to the brands to kindly pay us at least the cutting and making charge against the booked quantity of which we are holding at our end. This way we can at least pay our workers. [Cutting and making] is at an average one-fourth of the total FOB cost.”

So far, brands and retailers seem to be saying little with regard to concessions to help save the factories that make for them as the world shuts down and borders close amid the COVID-19 pandemic. In fewer than four months, the novel coronavirus has changed the face of supply chains and exposed their fragility in a way few may have been able to grasp just five months back.

And Bangladesh, which, after China, produces more garments than anywhere else in the world, counts on the sector for more than 80 percent of its exports and could face the biggest blow.